Transportation Trends and Driver Shortage in Last Mile Fuel Delivery
In a recent Freight Waves article survey results from a supply chain survey were given showing that transportation capacity had reached new lows as and such, pricing is increasing. While this survey focused on freight capacity there are impacts to the fuel delivery segment as well.
There are several trends at play here. First, driver shortage. Driver shortage has been an issue even pre-pandemic and many factors during the pandemic are exacerbating this issue. The first factor is that the average age of a truck driver is 55. Firms have reported seeing many drivers not returning after the lockdowns earlier this year. This can be for several reasons, but one reason is health concerns. According to an article in SC Times “Retirement-age drivers were already leaving the industry without the pandemic. But some drivers at higher risk of COVID-19 may have decided it’s not worth the risk and opted for early retirement”. Generally, when driver pay goes up some drivers come out of retirement to drive for peak rates. However, these drivers also have not returned, possibly also for health concerns.
In addition, driving schools are graduating less drivers because of social distancing and capacity restrictions being mandated. State and federal office closures because of the pandemic created hurdles for newcomers trying to get their commercial drivers license (CDL) or complete other necessary tasks for the state. Renewals of CDLs are also taking longer for employees to obtain.
The second factor is that consumer demand for online goods has greatly increased. While consumers are driving less, they are buying more, a lot more. According to the Freight Waves article, “Clearly consumer-facing firms are struggling to find the capacity needed to meet the increasing consumer appetite for home delivery,” the report stated. “It is interesting that logistics capacity is already this pressed at the end of Q3. Traditionally Q4 is when we see peak logistics demand, so the fact that it’s already close to maximum utilization calls into question whether or not missed or late deliveries will become an issue through peak retail times in November and December.”
How this Could affect Fuel Delivery
Freight drivers and tanker drivers are largely pulled from the same group of individuals. There are some licensing differences, but there is an overlap in the talent pool. This talent pool overlap is making it more difficult to recruit tanker drivers and at the same time with increasing driver pay, cuts deeply into our thin margin business.
With carriers finding it harder to recruit drivers there are a few different ways it may impact fuel delivery. First, rates will likely increase as driver pay increases. Second, they will value reliability pre-planning of fuel orders. So, what could happen is that the rates may change based on when the fuel order is placed. Currently, there are few penalties placed on same day orders. However, with limited availability, and “emergency” order could start garnering larger fees. In addition, a wholesaler may have to contact several carriers before they find one with the capacity and willingness to accept the order.
How we can Help
If you are a fuel wholesaler struggling to find reliable carriers, we have a Managed Services team who can connect you with our 3PL Carrier network. We also provide software to automate your order process so that you can improve your margins.
For carriers, we have software to automate your manual processes to improve your margins and driver software to capture documentation electronically. We are also looking for quality, reliable 3PL Carriers to add to our network.
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